So we’re talking, some about Rap Genius, but mostly about what his girlfriend’s model friend told him about Williamsburg and which famous producer he went paddleboarding with and how much one particular sculpture appreciated, and then finally he asks “so, what valuation are you guys raising at?”

And then you think about your whole pre-Y Combinator existence. For the two years before we got into YC, Rap Genius was a side project my friends and I thought was cool, but no one else cared about or even thought of as something that was trying to be a business.

So what happened? Were we actually hot all along? Was everyone’s previous lack of interest fake? It seemed pretty real at the time! Or maybe it’s the post-demo day limelight that’s fake and soon everyone will go back to not caring? But of course the whole point is that there is no underlying objective reality – there’s no teacher’s edition of the startup textbook that explains which companies are ACTUALLY hot, and what the REAL CORRECT Rap Genius valuation is.. Or maybe getting into Y Combinator is the teacher’s edition, but then all the pages are blank. It doesn’t matter – the point is that the shoes aren’t magic, you have to force yourself to dance.

Paul Graham takes one look at the spreadsheet and announces “Wow, you guys are totally fucked! There’s no way you can get to $1.5M if these are your only leads!” And of course this would be a mega-embarrassing outcome because it would mean there was much less interest at the valuation we were seeking than we had conveyed to the people who had already invested.

PG advised us to dream up some way of lowering our cap for our existing investors to get more takers, which would have been a hella-beta conversation to have and who knows whether it would even work because showing that kind of weakness is a major turnoff.

So fundraising is a psychologically trying experience that depends very little on any sober analysis of the quality of your product and much more on how well you can project confidence and manage your own psychology.

And of course this was only the seed round! Raising a Series A is much harder. Whereas in the seed round you’re looking for a bunch of people to commit a few hundred thousand dollars and little reputation and time, in your Series A you’re looking for ONE person to bet on you to the tune of millions of dollars, a ton of time, and his entire reputation.

About “How Rap Genius Raised $1.8M in Seed Funding Without Knowing What We Were Doing”

Adapted from a speech Rap Genius co-founder LEMON gave at General Assembly, this is the story of how the Rap Genius founders learned to fundraise and also to believe in themselves (and also that learning to fundraise IS just learning to believe in yourself).

"How Rap Genius Raised $1.8M in Seed Funding Without Knowing What We Were Doing" Track Info